Related Tags

Omnichannel's biggest challenge: privacy?

With consumers increasingly expecting seamless experiences across channels, brick-and-mortar retailers are recognizing they may have an advantage over online competitors which have, thus far, countered only with delivery lockers and improved shipping capabilities.

Physical stores, of course, may be an advantage, but they don't guarantee success. To seize the omnichannel advantage, retailers of all shapes and sizes will need to do more to bridge the gap between the online and offline words.

The good news: the gap has narrowed considerably. Many large retailers, for instance, have unified customer databases, so whether a purchase takes place online or offline, it is attributed to a single customer record provided that a known credit card or rewards card is used. This enables retailers to improve their marketing and to attribute sales to marketing campaigns.

But away from the point-of-sale, retailers are far less likely to have as much data about your offline shopping habits as they do about your online shopping habits. Whereas it's relatively easy to track customers as they shop online, tracking them in a similar fashion while they walk up and down the aisles of a store is not yet possible for most.

Your iPhone as iCookie

Not surprisingly, numerous companies are trying to change that. One of them, New York-based Nomi, launched yesterday. Started by former Salesforce and Buddy Media executives, and backed by $3m in venture capital funding, Nomi turns customer smartphones into real-world cookies.

As detailed by PandoDaily's Erin Griffith, Nomi uses the WiFi capabilities of smartphones to track potential customers and customers. When an individual carrying a smartphone passes by a store, Nomi knows, enabling it to track "window conversion," or the number of customers who walk into a store off of the street. Once inside the store, Nomi can track metrics such as visit duration and bounce rate, and can facilitate A/B tests for in-store promotions.

Because each smartphone is unique, Nomi can track a customer's offline engagement across multiple visits to a store and across visits to different stores. This creates some interesting possibilities for retailers. For instance, a multi-store retailer could compare customer behavior in high-performing stores to customer behavior in underperforming stores. That might lead to actionable insight that helps increase sales at underperforming locations.

No privacy, better experience?

Currently, Nomi's privacy policy indicates that it will "Never tie any personally identifiable consumer data to a specific device or behavior." But it wouldn't be too difficult to tie a device to an identified customer once the customer identifies herself via a purchase or other means, something that Nomi's Chief Revenue Officer Wesley Barrow obviously recognizes.

On this possibility of customers consenting to such a connection, Nomi's Chief Revenue Officer, Wesley Barrow, tells PandoDaily, "We know in the future people will want to opt into this kind of thing because they get this extra layer of service with the retailer knowing who they are." In fact, according to AdAge, Nomi is prepping a service, dubbed Engage, that will encourage customers to identify themselves in exchange for discounts.

But will customers want retailers tracking their every move in a store in the hopes that it will lead to a deal or better overall experience?

Time will tell. Certainly, some probably will go along, especially if they believe their participation will save them a few dollars. But there's good reason to believe that a significant number of customers won't be receptive to the idea that their iPhones will be playing the role of James Bond, retail surveillance agent, the next time they walk by a favorite store.

For retailers striving to create compelling omnichannel experiences, this means one thing: don't focus too much on tracking your customers down to their every movement in your stores. Not only is it likely to alienate a good number of them if and when they find out, it could actually be a distraction.

Yes, it's important to understand customer behavior, and to optimize for it. Technologies like Nomi's can play a role here. But omnichannel retail is about providing high-quality, delightful experiences wherever and whenever customers choose to engage with your business. That requires a strategic commitment to experience; it doesn't necessarily require that you become a stalker.

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Digital Pulse newsletter. You will receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.